J.C. Penney files for bankruptcy as coronavirus pushes retailer over edge J.C. Penney joins J. Crew and Neiman Marcus in the Chapter 11 heap
By James Leggate FOX Business
Retailer J.C. Penney filed for Chapter 11 bankruptcy protection after the coronavirus pandemic forced stores to shut, the company announced Friday evening, joining J. Crew and Neiman Marcus.
The stock has lost over 83 percent of its value in the last 12 months as business deteriorated even before the pandemic hit.
Penney’s had been making efforts to revive the business but the coronavirus “created unprecedented challenges,” CEO Jill Soltau said in a statement.
The Plano, Texas-based chain’s parent, J. C. Penney Company, said it had entered into a restructuring support agreement with the lenders that hold about 70 percent of its first lean debt. The deal includes terms for financial restructuring designed to cut several billion in debt.
An unspecified number of its stores will close in phases as it looks to shrink its footprint going ahead.
J.C. PENNEY STAVES OFF BANKRUPTCY
Earlier Friday, Penney made a $17 million payment to its lenders. The company had about $500 million in cash as of the bankruptcy filing and it has received commitments for $900 million in debtor- in-possession financing, including $450 million in new money, though the financing still requires court approval.
The restructuring agreement is also designed to help Penney navigate through the ongoing coronavirus pandemic, the company said. Penney will continue fulfilling online orders and offering contactless curbside pickup service at its open stores.
“As a result, the American retail industry has experienced a profoundly different new reality, requiring JCPenney to make difficult decisions in running our business to protect the safety of our associates and customers and the future of our company,” Soltau said.
Many retailers have struggled as the coronavirus forced non- essential workers to stay home while others have thrived including Amazon and Walmart.
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